Solution Manual Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill CHAPTER 1 INTRODUCTION TO TAX PRACTICE AND ETHICS

Federall2Taxl2Research,l212thl2Editi Pagel21-1
on



Solution Manual Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill


CHAPTER 1
INTRODUCTION TO TAX PRACTICE AND ETHICS



DISCUSSIONl2QUESTIONS


1-1.
Inl2thel2Unitedl2States,l2thel2taxl2systeml2isl2anl2outgrowthl2ofl2thel2followingl2fivel2discip
lines:l2law,l2accounting,l2economics,l2politicall2science,l2andl2sociology.l2Thel2environmentl2forl
2thel2taxl2systeml2isl2providedl2byl2thel2principlesl2ofl2economics,l2sociology,l2andl2politicall2scien
ce,l2whilel2thel2legall2andl2accountingl2fieldsl2arel2responsiblel2forl2 thel2system‘sl2interpretationl2
andl2application.


Eachl2ofl2thesel2disciplinesl2affectsl2thisl2country‘sl2taxl2systeml2inl2al2uniquel2way.l2Economistsl2
address2lsuchl2issuesl2asl2howl2proposedl2taxl2legislationl2willl2affectl2thel2ratel2ofl2inflationl2orl2eco
nomicl2growth.2lMeasurementl2ofl2thel2sociall2equityl2ofl2al2taxl2andl2determiningl2whetherl2al2taxl2
systeml2discriminatesl2againstl2certainl2taxpayersl2arel2issuesl2thatl2arel2examinedl2byl2sociologist
sl2andl2politicall2scientists.
Finally,l2attorneysl2arel2responsiblel2forl2thel2interpretationl2ofl2thel2taxationl2statutes,l2andl2accou
ntants2lensurel2thatl2thesel2samel2statutesl2arel2appliedl2consistently.


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1-2. Thel2otherl2majorl2categoriesl2ofl2taxl2practicel2inl2additionl2tol2taxl2researchl2arel2asl2follows:


 Taxl2compliance
 Taxl2planning
 Taxl2litigatio


n2lPagel25


1-3.
Taxl2compliancel2consistsl2ofl2gatheringl2pertinentl2information,l2evaluatingl2andl2classif
yingl2thatl2information,l2andl2filingl2anyl2necessaryl2taxl2returns.l2Compliancel2alsol2includesl2oth

,Pagel21-2 SOLUTIONSl2MANUA
L
erl2functionsl2necessaryl2tol2satisfyl2governmentall2requirements,l2suchl2asl2representing l2al2client

l2duringl2anl2Internal2lRevenuel2Servicel2(IRS)l2audit.

,Federall2Taxl2Research,l212thl2Editi Pagel21-3
on


Pagel25


1-4.
Mostl2ofl2thel2taxl2compliancel2workl2isl2performedl2byl2commerciall2taxl2preparers,l2enro
lledl2agentsl2(EAs),l2attorneys,l2andl2certifiedl2publicl2accountantsl2(CPAs).l2Noncomplexl2indivi
dual,l2partnership,2landl2corporatel2taxl2returnsl2oftenl2arel2completedl2byl2commerciall2taxl2prepar
ers.l2Thel2preparationl2ofl2morel2complexl2returnsl2usuallyl2isl2performedl2byl2EAs,l2attorneys,l2an
dl2CPAs.l2Thel2latterl2groupsl2also2lprovidel2taxl2planningl2servicesl2andl2representl2theirl2clientsl2b
eforel2thel2IRS.


Anl2EAl2isl2onel2whol2isl2admittedl2tol2practicel2beforel2thel2IRSl2byl2passingl2al2speciall2IRS-
administeredl2examination,l2orl2whol2hasl2workedl2forl2thel2IRSl2forl2fivel2yearsl2andl2isl2issuedl2al2p
ermitl2tol2representl2clientsl2beforel2thel2IRS.l2CPAsl2andl2attorneysl2arel2notl2requiredl2tol2takel2thisl
2examinationl2andl2arel2automaticallyl2admittedl2tol2practicel2beforel2thel2IRSl2ifl2theyl2arel2inl2goodl
2standingl2withl2thel2appropriate2lprofessionall2licensingl2board.


Pagel25l2andl2Circularl2230




1-5.
Taxl2planningl2isl2thel2processl2ofl2arrangingl2one‘sl2financiall2affairsl2tol2minimizel2anyl2taxl
2liability.l2Muchl2ofl2modernl2taxl2practicel2centersl2aroundl2thisl2process,l2andl2thel2resultingl2outcom
el2isl2taxl2avoidance.
Therel2isl2nothingl2illegall2orl2immorall2inl2thel2avoidancel2ofl2taxationl2asl2longl2asl2thel2taxpayerl2re
mainsl2withinl2legall2bounds.l2Inl2contrast,l2taxl2evasionl2constitutesl2thel2illegall2nonpaymentl2ofl2al2
taxl2andl2cannot2lbel2condoned.l2Activitiesl2ofl2thisl2sortl2clearlyl2violatel2existingl2legall2constraintsl2a
ndl2falll2outsidel2ofl2thel2domainl2ofl2thel2professionall2taxl2practitioner.


Pagel26


1-6.
Inl2anl2openl2taxl2planningl2situation,l2thel2transactionl2isl2notl2yetl2complete;l2therefore,l2thel
2taxl2practitioner2lmaintainsl2somel2degreel2ofl2controll2overl2thel2potentiall2taxl2liability,l2andl2thel2tra
nsactionl2mayl2bel2modi-
l2 fiedl2tol2achievel2al2morel2favorablel2taxl2treatment.l2Inl2al2closedl2transactionl2however,l2alll2ofl2thel
2pertinentl2actionsl2havel2beenl2completed,l2andl2taxl2planningl2activitiesl2mayl2bel2limitedl2tol2thel2pr

, Pagel21-4 SOLUTIONSl2MANUA
L
esentationl2ofl2thel2situationl2tol2thel2governmentl2inl2thel2mostl2legallyl2advantageous l2 mannerl2 possi

ble.